ID :
40527
Wed, 01/14/2009 - 10:54
Auther :
Shortlink :
http://m.oananews.org//node/40527
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India mulls to allow 25 pc FDI to shore up aviation sector
New Delhi, Jan 13 (PTI) In the backdrop of the major financial crisis faced by the Indian aviation sector, the government is toying with the idea of allowing foreign airlines to pick up about 25 percent stake in cash-strapped Indian carriers.
This is one of the proposals being considered by the
government. The present FDI policy in aviation does not allow
foreign airlines to invest in Indian carriers.
However, no formal decision has yet been taken and the
proposal, backed by demands from Kingfisher Airlines promoter
Vijay Mallya, is one among several ideas being considered by
the government, Civil Aviation Ministry officials said, adding
a note of caution that "we may or may not do it".
"Some different measures need to be taken to see that
an untoward situation, financial or otherwise, does not arise
in the running of an airline," they said, reminding of the
early 1990s when several Indian airlines closed down.
As per the proposal, FDI by an airline, with a cap of
20-25 per cent, was "one of the options" being considered,
they said, adding that any change in the FDI policy would have
to be cleared by the Union Cabinet.
When contacted, Civil Aviation Minister Praful Patel
said, "There is no clarity on the issue as yet. It is only one
of the options which are being considered."
The officials said that keeping in mind the serious
financial difficulties faced by the airlines, the government
has asked oil companies to defer by six months the repayment
of airlines' dues. Other measures like abolition of five per
cent customs duty on jet fuel were also taken.
"What other extraordinary steps can a government take?
It cannot write a cheque to a private airline," the officials
said, while asserting that there was no "bailout" package
being offered to the beleaguered aviation industry.
Asked about Air India's re-capitalisation plan, they said
the proposal was "being processed" by the government.
"It is owned by the government and like any owner of a
company, government should be ready to infuse liquidity into
it to make it a viable entity. With a very small liquidity
base of Rs 145 crore, it has placed orders worth about Rs
44,000 crore which is absolutely unacceptable," they said.
The 77-year-old airline, which initiated a fleet renewal
programme three years ago and merged with its sister airline
Indian, has proposed the infusion of Rs 1,000-1,500 crore as
equity capital.
It is also looking for soft loans to the tune of Rs 1,000
crore from the government that can be repaid over a period of
time. PTI ARC
This is one of the proposals being considered by the
government. The present FDI policy in aviation does not allow
foreign airlines to invest in Indian carriers.
However, no formal decision has yet been taken and the
proposal, backed by demands from Kingfisher Airlines promoter
Vijay Mallya, is one among several ideas being considered by
the government, Civil Aviation Ministry officials said, adding
a note of caution that "we may or may not do it".
"Some different measures need to be taken to see that
an untoward situation, financial or otherwise, does not arise
in the running of an airline," they said, reminding of the
early 1990s when several Indian airlines closed down.
As per the proposal, FDI by an airline, with a cap of
20-25 per cent, was "one of the options" being considered,
they said, adding that any change in the FDI policy would have
to be cleared by the Union Cabinet.
When contacted, Civil Aviation Minister Praful Patel
said, "There is no clarity on the issue as yet. It is only one
of the options which are being considered."
The officials said that keeping in mind the serious
financial difficulties faced by the airlines, the government
has asked oil companies to defer by six months the repayment
of airlines' dues. Other measures like abolition of five per
cent customs duty on jet fuel were also taken.
"What other extraordinary steps can a government take?
It cannot write a cheque to a private airline," the officials
said, while asserting that there was no "bailout" package
being offered to the beleaguered aviation industry.
Asked about Air India's re-capitalisation plan, they said
the proposal was "being processed" by the government.
"It is owned by the government and like any owner of a
company, government should be ready to infuse liquidity into
it to make it a viable entity. With a very small liquidity
base of Rs 145 crore, it has placed orders worth about Rs
44,000 crore which is absolutely unacceptable," they said.
The 77-year-old airline, which initiated a fleet renewal
programme three years ago and merged with its sister airline
Indian, has proposed the infusion of Rs 1,000-1,500 crore as
equity capital.
It is also looking for soft loans to the tune of Rs 1,000
crore from the government that can be repaid over a period of
time. PTI ARC
